I saw something on Twitter the other day that said that Goldman had 600 cash equity traders in 2000 and has 2 today. Not sure how accurate that is, but that would not surprise me in the least. Automation and such. We have heard it before.
And people are looking to automate EVERYTHING on Wall Street. Another piece about Goldman, that Matt Levine wrote about, about how the firm is trying to automate a bunch of different investment banking functions. There goes the analyst class, printing pitchbooks. So for sure, a lot of these jobs are going away, have gone away, and are never coming back.
But you can also make the argument that the Street is a bit understaffed. When it's gotten to the point that one person is responsible for 10,000 different bonds, it's gotten a little ridiculous. Get rid of Volcker, and there are plenty of opportunities to make money.
Banks are still firing. They aren't even firing on the lows, they are firing on the first uptick, which is crazy. My view: they're going to have to hire everyone back in two years.
Two years. Give it two years. They will be hiring people hand over fist.
It will be back to the old days of recruiting, where it's a complete food fight to get the smartest kids, where candidates can play the banks against each other. All the old recruiting events with Miller Lite and chicken-on- a-stick. It's coming back. And pay is going up, too, I can pretty much assure you of that.
Now, the types of things that people will be doing will be different than what they did 10-15 years ago. Nobody really needs to hire a trade assistant. Or someone to print pitchbooks. But there are value-added things that you could hire people to do. What, I don't know. I'm not smart enough to figure that out. But it's pretty easy to spot the bottom in something, and it's even easier to see when an industry is firing people on the lows.
Now, the old saying was that the banks would fire people on the lows and hire people on the highs. And that hasn't happened for the last eight years, because there hasn't been a low! It has just gotten worse and worse. But you can't tell me that things aren't getting better. Trading revenues are already improving. Just you wait--the banking business is going to get unimaginably good.
Wait and see...Business Insider is going to be doing a piece about this in a year or two, about how banks have increased their recruiting efforts. Then there will be a lot of buzz about careers on Wall Street again. Take a look around thefloor. My guess is that the average age is over 40. That's not normal. It wasn't like that when I worked on the street. The average age was 27. The Street has gotten really old because all the old-timers have been clinging (with varied success) to these jobs. In addition to getting bigger, I suspect that Wall Street is going to get a lot younger.
Let me know when that BI/Bloomberg article comes out. I'll be happy to say I told you so. I'm not just bullish on bank stocks, I'm bullish on bank people, and bank culture. It's back.
Mod Note (Andy): This post is an adaptation from the February 21th edition of Jared's Daily Dirtnap Newsletter. If you'd like to read more, WSO readers qualify for a $100 discount to his Daily Dirtnap daily market newsletter...just email [email protected] and mention "WSO Monkey Discount". You can follow Jared on twitter at @dailydirtnap.